Exhibit 10.1


 




 





GUARANTEE AGREEMENT


 


by and between


 


FIRST REGIONAL
BANCORP


 


and


 


U.S. BANK NATIONAL
ASSOCIATION


 


Dated as of March 17,
2004


 




 




















 


GUARANTEE AGREEMENT


 


This GUARANTEE
AGREEMENT (this “Guarantee”), dated as of March 17, 2004, is executed and delivered
by First Regional Bancorp, a California corporation (the “Guarantor”), and U.S.
Bank National Association, a national banking association, organized under the
laws of the United States of America, as trustee (the “Guarantee Trustee”), for
the benefit of the Holders (as defined herein) from time to time of the Capital
Securities (as defined herein) of First Regional Statutory Trust III, a
Connecticut statutory trust (the “Issuer”).


 


WHEREAS,
pursuant to an Amended and Restated Declaration of Trust (the “Declaration”),
dated as of the date hereof among U.S. Bank National Association, not in its
individual capacity but solely as institutional trustee, the administrators of
the Issuer named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof those undivided beneficial interests, having an
aggregate liquidation amount of $7,500,000.00 (the “Capital Securities”); and


 


WHEREAS, as
incentive for the Holders to purchase the Capital Securities, the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth in
this Guarantee, to pay to the Holders of Capital Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms
and conditions set forth herein;


 


NOW,
THEREFORE, in consideration of the purchase by each Holder of the Capital
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit
of the Holders.


 


ARTICLE I


 


DEFINITIONS AND INTERPRETATION


 


Section 1.1.           Definitions and Interpretation.
In this Guarantee, unless the context otherwise
requires:


 


(a)           capitalized
terms used in this Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;


 


(b)           a
term defined anywhere in this Guarantee has the same meaning throughout;


 


(c)           all
references to “the Guarantee” or “this Guarantee” are to this Guarantee as
modified, supplemented or amended from time to time;


 


(d)           all
references in this Guarantee to “Articles” or “Sections” are to Articles or
Sections of this Guarantee, unless otherwise specified;


 


(e)           terms
defined in the Declaration as at the date of execution of this Guarantee have
the same meanings when used in this Guarantee, unless otherwise defined in this
Guarantee or unless the context otherwise requires; and


 


(f)            a
reference to the singular includes the plural and vice versa.


 


“Affiliate” has the same meaning as given to that term in
Rule 405 of the Securities Act of 1933, as amended, or any successor rule
thereunder.


 

















 


“Beneficiaries” means any Person to whom the Issuer is or
hereafter becomes indebted or liable.


 


“Capital Securities” has the meaning set forth in the recitals
to this Guarantee.


 


“Common Securities” means the common securities issued by the
Issuer to the Guarantor pursuant to the Declaration.


 


“Corporate Trust Office” means the office of the Guarantee
Trustee at which the corporate trust business of the Guarantee Trustee shall,
at any particular time, be principally administered, which office at the date
of execution of this Guarantee is located at 225 Asylum Street, Goodwin Square,
Hartford, Connecticut  06103.


 


“Covered Person” means any Holder of Capital Securities.


 


“Debentures” means the debt securities of the Guarantor
designated the Floating Rate Junior Subordinated Deferrable Interest Debentures
due 2034 held by the Institutional Trustee (as defined in the Declaration) of
the Issuer.


 


“Declaration Event of Default” means an “Event of Default” as
defined in the Declaration.


 


“Event of Default” has the meaning set forth in Section 2.4(a).


 


“Guarantee Payments” means the following payments or
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by the Issuer: 
(i) any accrued and unpaid Distributions (as defined in the
Declaration) which are required to be paid on such Capital Securities to
the extent the Issuer shall have funds available therefor, (ii) the
Redemption Price to the extent the Issuer has funds available therefor, with
respect to any Capital Securities called for redemption by the Issuer,
(iii) the Special Redemption Price to the extent the Issuer has funds
available therefor, with respect to Capital Securities redeemed upon the
occurrence of a Special Event, and (iv) upon a voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Issuer (other than
in connection with the distribution of Debentures to the Holders of the Capital
Securities in exchange therefor as providedo in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Capital Securities to the date of payment, to the extent
the Issuer shall have funds available therefor, and (b) the amount of
assets of the Issuer remaining available for distribution to Holders in
liquidation of the Issuer (in either case, the “Liquidation Distribution”).


 


“Guarantee Trustee” means U.S. Bank National Association, until
a Successor Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Guarantee and thereafter means each
such Successor Guarantee Trustee.


 


“Guarantor” means First Regional Bancorp and each of its
successors and assigns.


 


“Holder” means any holder, as registered on the books and
records of the Issuer, of any Capital Securities; provided, however,
that, in determining whether the Holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder,
“Holder” shall not include the Guarantor or any Affiliate of the Guarantor.


 


“Indemnified Person” means the Guarantee Trustee, any Affiliate
of the Guarantee Trustee, or any officers, directors, shareholders, members,
partners, employees, representatives, nominees, custodians or agents of the
Guarantee Trustee.


 


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“Indenture” means the Indenture dated as of the date hereof
between the Guarantor and U.S. Bank National Association, not in its individual
capacity but solely as trustee, and any indenture supplemental thereto pursuant
to which the Debentures are to be issued to the institutional trustee of the
Issuer.


 


“Issuer” has the meaning set forth in the opening paragraph to
this Guarantee.


 


“Liquidation Distribution” has the meaning set forth in the
definition of “Guarantee Payments” herein.


 


“Majority in liquidation amount of the Capital Securities” means
Holder(s) of outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Capital
Securities then outstanding.


 


“Obligations” means any costs, expenses or liabilities (but not
including liabilities related to taxes) of the Issuer other than obligations of
the Issuer to pay to holders of any Trust Securities the amounts due such
holders pursuant to the terms of the Trust Securities.


 


“Officer’s Certificate” means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer’s
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:


 


(a)   a statement that the officer
signing the Officer’s Certificate has read the covenant or condition and the
definitions relating thereto;


 


(b)   a brief statement of the
nature and scope of the examination or investigation undertaken by the officer
in rendering the Officer’s Certificate;


 


(c)   a statement
that the officer has made such examination or investigation as, in such
officer’s opinion, is necessary to enable such officer to express an informed
opinion as to whether or not such covenant or condition has been complied with;
and


 


(d)   a statement as to whether,
in the opinion of the officer, such condition or covenant has been complied
with.


 


“Person” means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.


 


“Redemption Price” has the meaning set forth in the Indenture.


 


“Responsible Officer” means, with respect to the Guarantee
Trustee, any officer within the Corporate Trust Office of the Guarantee Trustee
including any Vice President, Assistant Vice President, Secretary, Assistant
Secretary or any other officer of the Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer’s knowledge of
and familiarity with the particular subject.


 


“Special Event” has the meaning set forth in the Indenture.


 


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“Special Redemption Price” has the meaning set forth in the
Indenture.


 


“Successor Guarantee Trustee” means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under
Section 3.1.


 


“Trust Securities” means the Common Securities and the Capital
Securities.


 


ARTICLE II


 


POWERS, DUTIES AND RIGHTS OF

GUARANTEE TRUSTEE


 


Section 2.1.           Powers and Duties of the Guarantee
Trustee.


 


(a)           This
Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders
of the Capital Securities, and the Guarantee Trustee shall not transfer this
Guarantee to any Person except a Holder of Capital Securities exercising his or
her rights pursuant to Section 4.4(b) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee.  The right,
title and interest of the Guarantee Trustee shall automatically vest in any
Successor Guarantee Trustee, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.


 


(b)           If
an Event of Default actually known to a Responsible Officer of the Guarantee
Trustee has occurred and is continuing, the Guarantee Trustee shall enforce
this Guarantee for the benefit of the Holders of the Capital Securities.


 


(c)           The
Guarantee Trustee, before the occurrence of any Event of Default and after
curing all Events of Default that may have occurred, shall undertake to perform
only such duties as are specifically set forth in this Guarantee, and no
implied covenants shall be read into this Guarantee against the Guarantee
Trustee.  In case an Event of Default
has occurred (that has not been waived pursuant to Section 2.4) and is
actually known to a Responsible Officer of the Guarantee Trustee, the Guarantee
Trustee shall exercise such of the rights and powers vested in it by this Guarantee,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.


 


(d)           No
provision of this Guarantee shall be construed to relieve the Guarantee Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:


 


(i)            prior to the
occurrence of any Event of Default and after the curing or waiving of all such
Events of Default that may have occurred:


 


(A)          the duties and
obligations of the Guarantee Trustee shall be determined solely by the express
provisions of this Guarantee, and the Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Guarantee, and no implied covenants or obligations shall be
read into this Guarantee against the Guarantee Trustee; and


 


(B)           in the absence of
bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished


 


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to the Guarantee
Trustee and conforming to the requirements of this Guarantee; but in the case
of any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Guarantee;


 


(ii)           the
Guarantee Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer of the Guarantee Trustee, unless it shall be
proved that such Responsible Officer of the Guarantee Trustee or the Guarantee
Trustee was negligent in ascertaining the pertinent facts upon which such
judgment was made;


 


(iii)          the
Guarantee Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the written
direction of the Holders of not less than a Majority in liquidation amount of
the Capital Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee, or relating to
the exercise of any trust or power conferred upon the Guarantee Trustee under
this Guarantee; and


 


(iv)          no
provision of this Guarantee shall require the Guarantee Trustee to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers, if the Guarantee Trustee shall have reasonable grounds for believing
that the repayment of such funds is not reasonably assured to it under the
terms of this Guarantee or security and indemnity, reasonably satisfactory to
the Guarantee Trustee, against such risk or liability is not reasonably assured
to it.


 


Section 2.2.           Certain Rights of Guarantee
Trustee.


 


(a)           Subject
to the provisions of Section 2.1:


 


(i)            The
Guarantee Trustee may conclusively rely, and shall be fully protected in acting
or refraining from acting upon, any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.


 


(ii)           Any
direction or act of the Guarantor contemplated by this Guarantee shall be
sufficiently evidenced by an Officer’s Certificate.


 


(iii)          Whenever,
in the administration of this Guarantee, the Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking, suffering or
omitting any action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officer’s Certificate of the Guarantor
which, upon receipt of such request, shall be promptly delivered by the
Guarantor.


 


(iv)          The
Guarantee Trustee shall have no duty to see to any recording, filing or
registration of any instrument (or any re-recording, refiling or
re-registration thereof).


 


(v)           The
Guarantee Trustee may consult with counsel of its selection, and the advice or
opinion of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and


 


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in accordance with
such advice or opinion. Such counsel may be counsel to the Guarantor or any of
its Affiliates and may include any of its employees.  The Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee from any court of competent
jurisdiction.


 


(vi)          The
Guarantee Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Guarantee Trustee,
against the costs, expenses (including attorneys’ fees and expenses and the
expenses of the Guarantee Trustee’s agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided, however, that nothing contained in
this Section 2.2(a)(vi) shall relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights and
powers vested in it by this Guarantee.


 


(vii)         The
Guarantee Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Guarantee Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.


 


(viii)        The
Guarantee Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents, nominees,
custodians or attorneys, and the Guarantee Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.


 


(ix)           Any
action taken by the Guarantee Trustee or its agents hereunder shall bind the
Holders of the Capital Securities, and the signature of the Guarantee Trustee
or its agents alone shall be sufficient and effective to perform any such
action.  No third party shall be
required to inquire as to the authority of the Guarantee Trustee to so act or
as to its compliance with any of the terms and provisions of this Guarantee,
both of which shall be conclusively evidenced by the Guarantee Trustee’s or its
agent’s taking such action.


 


(x)            Whenever
in the administration of this Guarantee the Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or right
or taking any other action hereunder, the Guarantee Trustee (i) may
request instructions from the Holders of a Majority in liquidation amount of
the Capital Securities, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting in accordance
with such instructions.


 


(xi)           The
Guarantee Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith, without negligence, and reasonably
believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Guarantee.


 


(b)           No
provision of this Guarantee shall be deemed to impose any duty or obligation on
the Guarantee Trustee to perform any act or acts or exercise any right, power,
duty or obligation conferred or imposed on it, in any jurisdiction in which it
shall be illegal or in which the Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law to perform any such act or acts
or to exercise any such right, power, duty or obligation.  No permissive power or authority available
to the Guarantee Trustee shall be construed to be a duty.


 


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Section 2.3.           Not Responsible for Recitals or
Issuance of Guarantee.  The recitals contained in this Guarantee shall be taken as the statements
of the Guarantor, and the Guarantee Trustee does not assume any responsibility
for their correctness.  The Guarantee
Trustee makes no representation as to the validity or sufficiency of this Guarantee.


 


Section 2.4.           Events of Default; Waiver.


 


(a)           An
Event of Default under this Guarantee will occur upon the failure of the
Guarantor to perform any of its payment or other obligations hereunder.


 


(b)           The
Holders of a Majority in liquidation amount of the Capital Securities may,
voting or consenting as a class, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default and its consequences.  Upon such waiver, any such Event of Default
shall cease to exist, and shall be deemed to have been cured, for every purpose
of this Guarantee, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.


 


Section 2.5.           Events of Default; Notice.


 


(a)           The
Guarantee Trustee shall, within 90 days after the occurrence of an Event of
Default, transmit by mail, first class postage prepaid, to the Holders of the
Capital Securities and the Guarantor, notices of all Events of Default actually
known to a Responsible Officer of the Guarantee Trustee, unless such defaults have
been cured before the giving of such notice, provided, however,
that the Guarantee Trustee shall be protected in withholding such notice if and
so long as a Responsible Officer of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Capital Securities.


 


(b)           The
Guarantee Trustee shall not be deemed to have knowledge of any Event of Default
unless the Guarantee Trustee shall have received written notice from the
Guarantor or a Holder of the Capital Securities (except in the case of a
payment default), or a Responsible Officer of the Guarantee Trustee charged
with the administration of this Guarantee shall have obtained actual knowledge
thereof.


 


ARTICLE III


 


GUARANTEE TRUSTEE


 


Section 3.1.           Guarantee Trustee; Eligibility.


 


(a)           There
shall at all times be a Guarantee Trustee which shall:


 


(i)            not be an Affiliate of the
Guarantor, and


 


(ii)           be
a corporation organized and doing business under the laws of the United States
of America or any State or Territory thereof or of the District of Columbia, or
Person authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. 
If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or examining
authority referred to above, then, for the purposes of this Section 3.1(a)(ii),
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.


 


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(b)           If at any time the Guarantee Trustee
shall cease to be eligible to so act under Section 3.1(a), the Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 3.2(c).


 


(c)           If
the Guarantee Trustee has or shall acquire any “conflicting interest” within
the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee
shall either eliminate such interest or resign to the extent and in the manner
provided by, and subject to this Guarantee.


 


Section 3.2.           Appointment, Removal and
Resignation of Guarantee Trustee.


 


(a)           Subject
to Section 3.2(b), the Guarantee Trustee may be appointed or removed without
cause at any time by the Guarantor except during an Event of Default.


 


(b)           The
Guarantee Trustee shall not be removed in accordance with Section 3.2(a) until
a Successor Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Guarantee Trustee
and delivered to the Guarantor.


 


(c)           The
Guarantee Trustee appointed to office shall hold office until a Successor
Guarantee Trustee shall have been appointed or until its removal or
resignation.  The Guarantee Trustee may
resign from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor Guarantee Trustee has
been appointed and has accepted such appointment by an instrument in writing
executed by such Successor Guarantee Trustee and delivered to the Guarantor and
the resigning Guarantee Trustee.


 


(d)           If
no Successor Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 3.2 within 60 days after
delivery of an instrument of removal or resignation, the Guarantee Trustee
resigning or being removed may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. 
Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Guarantee Trustee.


 


(e)           No
Guarantee Trustee shall be liable for the acts or omissions to act of any
Successor Guarantee Trustee.


 


(f)            Upon
termination of this Guarantee or removal or resignation of the Guarantee Trustee
pursuant to this Section 3.2, the Guarantor shall pay to the Guarantee Trustee
all amounts owing to the Guarantee Trustee under Sections 7.2 and 7.3
accrued to the date of such termination, removal or resignation.


 


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ARTICLE IV




GUARANTEE


Section 4.1.           Guarantee.


 


(a)           The
Guarantor irrevocably and unconditionally agrees to pay in full to the Holders
the Guarantee Payments (without duplication of amounts theretofore paid by the
Issuer), as and when due, regardless of any defense (except the defense of
payment by the Issuer), right of set-off or counterclaim that the Issuer may
have or assert.  The Guarantor’s
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Guarantor to the Holders or by causing the Issuer
to pay such amounts to the Holders.


 


(b)           The
Guarantor hereby also agrees to assume any and all Obligations of the Issuer
and in the event any such Obligation is not so assumed, subject to the terms and
conditions hereof, the Guarantor hereby irrevocably and unconditionally
guarantees to each Beneficiary the full payment, when and as due, of any and
all Obligations to such Beneficiaries. 
This Guarantee is intended to be for the benefit of, and to be enforceable
by, all such Beneficiaries, whether or not such Beneficiaries have received
notice hereof.


 


Section 4.2.            Waiver
of Notice and Demand. The
Guarantor hereby waives notice of acceptance of this Guarantee and of any
liability to which it applies or may apply, presentment, demand for payment,
any right to require a proceeding first against the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.


 


Section 4.3.           Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:


 


(a)           the
release or waiver, by operation of law or otherwise, of the performance or
observance by the Issuer of any express or implied agreement, covenant, term or
condition relating to the Capital Securities to be performed or observed by the
Issuer;


 


(b)           the
extension of time for the payment by the Issuer of all or any portion of the
Distributions, Redemption Price, Special Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Capital
Securities or the extension of time for the performance of any other obligation
under, arising out of or in connection with, the Capital Securities (other than
an extension of time for payment of Distributions, Redemption Price, Special
Redemption Price, Liquidation Distribution or other sum payable that results
from the extension of any interest payment period on the Debentures or any
extension of the maturity date of the Debentures permitted by the Indenture);


 


(c)           any
failure, omission, delay or lack of diligence on the part of the Holders to
enforce, assert or exercise any right, privilege, power or remedy conferred on
the Holders pursuant to the terms of the Capital Securities, or any action on
the part of the Issuer granting indulgence or extension of any kind;


 


(d)           the
voluntary or involuntary liquidation, dissolution, sale of any collateral,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt of, or other
similar proceedings affecting, the Issuer or any of the assets of the Issuer;


 


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(e)           any
invalidity of, or defect or deficiency in, the Capital Securities;


 


(f)            the
settlement or compromise of any obligation guaranteed hereby or hereby
incurred; or


 


(g)           any
other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a guarantor, it being the intent of this
Section 4.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.


 


There shall be
no obligation of the Holders to give notice to, or obtain consent of, the
Guarantor with respect to the happening of any of the foregoing.


 


Section 4.4.           Rights of Holders.


 


(a)           The
Holders of a Majority in liquidation amount of the Capital Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of this Guarantee or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under this Guarantee; provided, however, that (subject to
Section 2.1) the Guarantee Trustee shall have the right to decline to
follow any such direction if the Guarantee Trustee being advised by counsel
determines that the action or proceeding so directed may not lawfully be taken
or if the Guarantee Trustee in good faith by its board of directors or
trustees, executive committees or a trust committee of directors or trustees
and/or Responsible Officers shall determine that the action or proceedings so
directed would involve the Guarantee Trustee in personal liability.


 


(b)           Any
Holder of Capital Securities may institute a legal proceeding directly against
the Guarantor to enforce the Guarantee Trustee’s rights under this Guarantee,
without first instituting a legal proceeding against the Issuer, the Guarantee
Trustee or any other Person.  The
Guarantor waives any right or remedy to require that any such action be brought
first against the Issuer, the Guarantee Trustee or any other Person before so
proceeding directly against the Guarantor.


 


Section 4.5.           Guarantee of Payment. This Guarantee creates a guarantee of payment and not of collection.


 


Section 4.6.           Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders
of Capital Securities against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if, after giving effect to any such
payment, any amounts are due and unpaid under this Guarantee.  If any amount shall be paid to the Guarantor
in violation of the preceding sentence, the Guarantor agrees to hold such
amount in trust for the Holders and to pay over such amount to the Holders.


 


Section 4.7.           Independent Obligations. The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 4.3 hereof.


 


Section 4.8.           Enforcement by a Beneficiary.  A Beneficiary may enforce
the obligations of the Guarantor contained in Section 4.1(b) directly against
the Guarantor and the Guarantor waives any right or remedy to require that any
action be brought against the Issuer or any other person or entity


 


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before proceeding against the Guarantor.  The Guarantor shall be subrogated to all
rights (if any) of any Beneficiary against the Issuer in respect of any amounts
paid to the Beneficiaries by the Guarantor under this Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee, if at the
time of any such payment, and after giving effect to such payment, any amounts
are due and unpaid under this Guarantee.




ARTICLE V


 


LIMITATION OF
TRANSACTIONS; SUBORDINATION


 


Section 5.1.           Limitation of Transactions. So long as any Capital Securities remain outstanding, if (a) there
shall have occurred and be continuing an Event of Default or a Declaration
Event of Default or (b) the Guarantor shall have selected an Extension
Period as provided in the Declaration and such period, or any extension
thereof, shall have commenced and be continuing, then the Guarantor shall not
and shall not permit any Affiliate to (x) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Guarantor’s or such Affiliate’s capital stock
(other than payments of dividends or distributions to the Guarantor) or make
any guarantee payments with respect to the foregoing or (y) make any
payment of principal of or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Guarantor or any Affiliate that rank pari passu in
all respects with or junior in interest to the Debentures (other than, with
respect to clauses (x) and (y) above, (i) repurchases, redemptions or
other acquisitions of shares of capital stock of the Guarantor in connection
with any employment contract, benefit plan or other similar arrangement with or
for the benefit of one or more employees, officers, directors or consultants,
in connection with a dividend reinvestment or stockholder stock purchase plan
or in connection with the issuance of capital stock of the Guarantor (or
securities convertible into or exercisable for such capital stock) as
consideration in an acquisition transaction entered into prior to the
occurrence of the Event of Default, Declaration Event of Default or Extension
Period, as applicable, (ii) as a result of any exchange or conversion of
any class or series of the Guarantor’s capital stock (or any capital stock of a
subsidiary of the Guarantor) for any class or series of the Guarantor’s capital
stock or of any class or series of the Guarantor’s indebtedness for any class
or series of the Guarantor’s capital stock, (iii) the purchase of
fractional interests in shares of the Guarantor’s capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) any declaration of a dividend in connection
with any stockholders’ rights plan, or the issuance of rights, stock or other
property under any stockholders’ rights plan, or the redemption or repurchase
of rights pursuant thereto, (v) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock and any cash payments in lieu of fractional shares issued in
connection therewith, or (vi) payments under this Guarantee).


 


Section 5.2.           Ranking. This Guarantee will constitute an unsecured obligation of the Guarantor
and will rank subordinate and junior in right of payment to all present and
future Senior Indebtedness (as defined in the Indenture) of the Guarantor.  By their acceptance thereof, each Holder of
Capital Securities agrees to the foregoing provisions of this Guarantee and the
other terms set forth herein.


 


The right of
the Guarantor to participate in any distribution of assets of any of its
subsidiaries upon any such subsidiary’s liquidation or reorganization or
otherwise is subject to the prior claims of creditors of that subsidiary,
except to the extent the Guarantor may itself be recognized as a creditor of
that subsidiary.  Accordingly, the
Guarantor’s obligations under this Guarantee will be effectively


 


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subordinated to all existing
and future liabilities of the Guarantor’s subsidiaries, and claimants should
look only to the assets of the Guarantor for payments hereunder.  This Guarantee does not limit the incurrence
or issuance of other secured or unsecured debt of the Guarantor, including
Senior Indebtedness of the Guarantor, under any indenture that the Guarantor
may enter into in the future or otherwise.


 


ARTICLE VI


 


TERMINATION


 


Section 6.1.           Termination. This Guarantee shall terminate as to the Capital Securities
(i) upon full payment of the Redemption Price or Special Redemption Price
of all Capital Securities then outstanding, (ii) upon the distribution of
all of the Debentures to the Holders of all of the Capital Securities or
(iii) upon full payment of the amounts payable in accordance with the
Declaration upon dissolution of the Issuer. 
This Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any Holder of Capital Securities must restore
payment of any sums paid under the Capital Securities or under this Guarantee.


 


ARTICLE VII


 


INDEMNIFICATION


 


Section 7.1.           Exculpation.


 


(a)           No
Indemnified Person shall be liable, responsible or accountable in damages or
otherwise to the Guarantor or any Covered Person for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Guarantee and in a
manner that such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Guarantee or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person’s negligence or
willful misconduct with respect to such acts or omissions.


 


(b)           An
Indemnified Person shall be fully protected in relying in good faith upon the records
of the Issuer or the Guarantor and upon such information, opinions, reports or
statements presented to the Issuer or the Guarantor by any Person as to matters
the Indemnified Person reasonably believes are within such other Person’s
professional or expert competence and who, if selected by such Indemnified
Person, has been selected with reasonable care by such Indemnified Person,
including information, opinions, reports or statements as to the value and
amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Capital Securities might properly be paid.


 


Section 7.2.           Indemnification.


 


(a)           The Guarantor agrees
to indemnify each Indemnified Person for, and to hold each Indemnified Person
harmless against, any and all loss, liability, damage, claim or expense
incurred without negligence or willful misconduct on the part of the
Indemnified Person, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including, but not limited to,
the costs and expenses (including reasonable legal fees and expenses) of the
Indemnified Person defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of the
Indemnified Person’s powers or duties hereunder.  The obligation to indemnify as set forth in this Section 7.2
shall survive the resignation or removal of the Guarantee Trustee and the
termination of this Guarantee.


 


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(b)           Promptly after
receipt by an Indemnified Person under this Section 7.2 of notice of the
commencement of any action, such Indemnified Person will, if a claim in respect
thereof is to be made against the Guarantor under this Section 7.2, notify
the Guarantor in writing of the commencement thereof; but the failure so to
notify the Guarantor (i) will not relieve the Guarantor from liability
under paragraph (a) above unless and to the extent that the Guarantor did
not otherwise learn of such action and such failure results in the forfeiture
by the Guarantor of substantial rights and defenses and (ii) will not, in
any event, relieve the Guarantor from any obligations to any Indemnified Person
other than the indemnification obligation provided in paragraph (a)
above.  The Guarantor shall be entitled
to appoint counsel of the Guarantor’s choice at the Guarantor’s expense to
represent the Indemnified Person in any action for which indemnification is
sought (in which case the Guarantor shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by the Indemnified Person or
Persons except as set forth below); provided, however, that such
counsel shall be reasonably satisfactory to the Indemnified Person.  Notwithstanding the Guarantor’s election to
appoint counsel to represent the Guarantor in an action, the Indemnified Person
shall have the right to employ separate counsel (including local counsel), and
the Guarantor shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the Guarantor to
represent the Indemnified Person would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any
such action include both the Indemnified Person and the Guarantor and the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it and/or other Indemnified Person(s) which are different
from or additional to those available to the Guarantor, (iii) the
Guarantor shall not have employed counsel satisfactory to the Indemnified
Person to represent the Indemnified Person within a reasonable time after
notice of the institution of such action or (iv) the Guarantor shall
authorize the Indemnified Person to employ separate counsel at the expense of
the Guarantor.  The Guarantor will not,
without the prior written consent of the Indemnified Persons, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Indemnified Persons are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Person from all liability arising out of such claim,
action, suit or proceeding.


 


Section 7.3.           Compensation; Reimbursement of
Expenses. The Guarantor agrees:


 


(a)           to
pay to the Guarantee Trustee from time to time such compensation for all
services rendered by it hereunder as the parties shall agree to from time to
time (which compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust); and


 


(b)           except
as otherwise expressly provided herein, to reimburse the Guarantee Trustee upon
request for all reasonable expenses, disbursements and advances incurred or
made by it in accordance with any provision of this Guarantee (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or willful misconduct.


 


For purposes
of clarification, this Section 7.3 does not contemplate the payment by the
Guarantor of acceptance or annual administration fees owing to the Guarantee
Trustee for services to be provided by the Guarantee Trustee under this
Guarantee or the fees and expenses of the Guarantee Trustee’s counsel in
connection with the closing of the transactions contemplated by this
Guarantee.  The provisions of this
Section 7.3 shall survive the resignation or removal of the Guarantee
Trustee and the termination of this Guarantee.


 


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ARTICLE VIII


 


MISCELLANEOUS


 


Section 8.1.           Successors and Assigns. All guarantees and agreements contained in this Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor
and shall inure to the benefit of the Holders of the Capital Securities then
outstanding.  Except in connection with
any merger or consolidation of the Guarantor with or into another entity or any
sale, transfer or lease of the Guarantor’s assets to another entity, in each
case, to the extent permitted under the Indenture, the Guarantor may not assign
its rights or delegate its obligations under this Guarantee without the prior
approval of the Holders of at least a Majority in liquidation amount of the Capital
Securities.


 


Section 8.2.           Amendments. Except with respect to any changes that do not adversely affect the
rights of Holders of the Capital Securities in any material respect (in which
case no consent of Holders will be required), this Guarantee may be amended
only with the prior approval of the Holders of not less than a Majority in
liquidation amount of the Capital Securities. 
The provisions of the Declaration with respect to amendments thereof
apply to the giving of such approval.


 


Section 8.3.           Notices. All notices provided for in this Guarantee shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:


 


(a)           If
given to the Guarantee Trustee, at the Guarantee Trustee’s mailing address set
forth below (or such other address as the Guarantee Trustee may give notice of
to the Holders of the Capital Securities and the Guarantor):


 


U.S. Bank
National Association

225 Asylum Street, Goodwin Square

Hartford, Connecticut  06103

Attention:  Corporate Trust Services
Division

Telecopy:  860-241-6889


 


With a copy
to:


 


U.S. Bank
National Association

1 Federal Street - 3rd Floor

Boston, Massachusetts  02110

Attention:  Paul D. Allen, Corporate
Trust Services Division

Telecopy:  617-603-6665


 


(b)           If
given to the Guarantor, at the Guarantor’s mailing address set forth below (or
such other address as the Guarantor may give notice of to the Holders of the
Capital Securities and to the Guarantee Trustee):


 


First Regional
Bancorp

1801 Century Park East, Suite 800

Los Angeles, California 90067-2302

Attention:  Thomas McCullough

Telecopy:  310-552-1772


 


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(c)           If
given to any Holder of the Capital Securities, at the address set forth on the
books and records of the Issuer.


 


All such
notices shall be deemed to have been given when received in person, telecopied
with receipt confirmed, or mailed by first class mail, postage prepaid, except
that if a notice or other document is refused delivery or cannot be delivered
because of a changed address of which no notice was given, such notice or other
document shall be deemed to have been delivered on the date of such refusal or
inability to deliver.


 


Section 8.4.           Benefit. This Guarantee is solely for the benefit of the Beneficiaries and,
subject to Section 2.1(a), is not separately transferable from the Capital
Securities.


 


Section 8.5.           Governing
Law. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW).


 


Section 8.6.           Counterparts.
This Guarantee may be executed in one or more
counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same instrument.


 


Section 8.7            Separability.
In case one or more of the provisions contained in this Guarantee shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Guarantee, but this Guarantee shall be construed as if such
invalid or illegal or unenforceable provision had never been contained herein.


 


Signatures appear on the following page


 


15

















 


THIS GUARANTEE
is executed as of the day and year first above written.


 


 


	
   

  	
  FIRST REGIONAL BANCORP, as Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas McCullough

  	
   

  
	
   

  	
   

  	
  Name:  Thomas
  McCullough

  
	
   

  	
   

  	
  Title: 
  Corporate Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION, as

  Guarantee Trustee

  
	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Paul D. Allen

  	
   

  
	
   

  	
   

  	
  Name:  Paul
  D. Allen

  
	
   

  	
   

  	
  Title:  Vice
  President

  
						



 


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